By Laura Sanicola
Nov 22 (Reuters) – Supply chain snags are threatening to hamper deliveries of ethanol needed for blending with gasoline ahead of the Thanksgiving weekend, according to ethanol traders and producers.
Unlike crude oil and other refined products, which can be transported by pipeline, ethanol is shipped primarily by train from various Corn Belt states to facilities where it is blended with gasoline.
That makes the sector more vulnerable to labor shortages and other supply issues that is reducing the availability of rail cars and truck drivers, traders said.
Ethanol is trading at approximately $2.20 per gallon, up more than 50% in the year to date.
U.S. retail gasoline prices are averaging about $3.40 nationwide per gallon, but vary by state based on rules around additives and state tax rates.
Corn-based ethanol is used to boost octane in transportation fuels and also needed for U.S. refiners to comply with federal standards to blend some 15 billion gallons of ethanol into their fuel each year. Shortages could hamper gasoline supply.
For the week ended Nov. 19, ethanol inventories in the east coast hovered near 5.6 million, near seven-year lows reached last week, according to the U.S. Energy Information Administration.
Ethanol margins are near seven-year highs as the economy has rebounded and fuel demand rises. That’s strained the rail companies that service the industry, however.
The amount of time rail cars carrying ethanol are idling on deliveries has climbed to nearly 28 hours per trip in 2021, with some cars dwelling more than 80 hours in one trip this month, according to data from the U.S. Department of Agriculture.
“Empty rail cars are just not coming back on time to be reloaded,” said one ethanol trader.
Rail workers are also trucking positions which are offering attractive signing bonuses to boost employment, sources said.
(Reporting by Laura Sanicola Editing by Bernadette Baum)
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